China and Turkey rev up efforts to strengthen ties

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ISTANBUL – Over the past year and a half, the relationship between China and Turkey has gone through serious ups and downs. In the summer of 2015, claims of a Chinese ban on Ramadan fasting in the country’s Muslim-populated Xinjiang region, which later turned out to be fabricated, snowballed in the Turkish Twittersphere, leading to anti-Chinese demonstrations, and souring the relations between the two countries. Reciprocal visits by presidents Xi Jinping and Recep Tayyip Erdoğan helped to breathe new life into the relationship, which, however, still had to suffer from a number of drawbacks, such as Ankara’s decision to cancel a missile defense system deal that was initially awarded to a Chinese company, and Beijing’s tightening of visa requirements for Turkish passport holders earlier this year.

Despite this bumpy ride, China and Turkey still see much to gain from their interaction. Ankara is deeply disappointed by the West’s hesitation to show empathy in the aftermath of the July 15 failed coup attempt, and is willing to strengthen its foreign policy options elsewhere. Gradual normalization of relations with Israel and Russia serves this purpose, so does greater engagement with China. In the meantime, Beijing wants to be more active in Turkey, which is not only located at the heart of a region where China has vital interests, but also positioned strategically along the route of the “One Belt, One Road” (OBOR) project.

Four developments within the span of only the past few days show that concrete efforts to strengthen ties, rather than rhetorical expressions of willingness to do so, are now in the pipeline for China and Turkey, offering prospects to carry the relationship to a new level.

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To start with, a Chinese business delegation organized by the Ministry of Commerce visited Turkey last week, signing 36 separate purchasing agreements with a total worth of $300 million. Accordingly, China will increase its imports of products like marble, chrome ore, soybean oil, cotton, wool, hazelnut and pistachios from Turkey. This amount is perhaps miniscule for a trading giant like China, whose imports totaled $1.68 trillion last year; and it is also not really likely to close Turkey’s trade deficit with China, which stands at an annual level of $22.5 billion at the moment. The deal is nevertheless important for Turkey, as it marks a milestone for Ankara’s efforts to balance its economic relationship with China. Turkey’s purpose here is two-fold: increasing exports to China and narrowing the deficit as much as possible on one hand, and attracting more Chinese investment on the other. Turkey’s Ministry of Economy has recently launched a detailed “China Action Plan” for this purpose, and business associations such as the Turkish-Chinese Business Council are actively analyzing the trade potential to China in products where Turkey has a competitive advantage. The agreements signed in Istanbul show that Turkey’s efforts in this respect find reciprocity by the Chinese side.

As the trade deals were being inked, a high-ranking Chinese politician, Wang Yang, vice premier in Li Keqiang’s government, was in Turkey. Wang chaired, together with his Turkish counterpart Mehmet Şimşek, the inaugural meeting of the newly established Sino-Turkish Cooperation Committee, an intergovernmental body bringing together bureaucrats from the two sides. The committee hopes to be more than just a talk shop, and this very first meeting, which resulted in the signing of an action Plan for the Development of Bilateral Trade and Investment Cooperation, can be said to have been quite successful in this respect. It was, however, merely a first step; what matters now is that the committee meets regularly, engages non-governmental stakeholders such as the business community and the academia as well, and more importantly, that the documents signed are acted upon. The second meeting of the committee is scheduled to take place in Beijing in 2018.

Thirdly, Turkey’s banking regulation authority announced on Sunday that the Bank of China, which was granted permission to operate in Turkey last May, is likely to commence its activities before the end of this year. According to the information made public after the meeting between the Turkish Banking Regulation and Supervision Agency (BDDK) and the executives of the Bank of China, the bank is considering funding large scale infrastructure projects in Turkey, including those in energy and transportation sectors, projects that will fall under the OBOR, as well as the planned “Kanal Istanbul” project, which will be an artificial waterway connecting the Black Sea with the Sea of Marmara as an alternative to the natural Bosphorus strait. Bank of China will be the second Chinese lender to operate in Turkey after ICBC, and the funding that will be provided through these banks is expected to play a vital role for Turkey’s aims of both financing its major projects under favorable terms and attracting more Chinese investment into its economy.

Finally, in addition to the week’s more economically oriented developments between the two countries, China Radio International (CRI) launched its Turkish franchise “CRI Türk” with a ceremony held in Istanbul. During the event, both sides stressed the importance of this initiative for improving the communication and dialogue between the Turks and the Chinese. At the moment it might be too early to tell to what extent the Turkish audience will be interested in China-related news and Chinese music, but if things work well, the CRI Türk franchise can turn into as a soft power asset for China in Turkey.

Dozens of trade agreements, an intergovernmental meeting, green light for the Bank of China, and the launch of CRI Türk: these all came within a matter of few days, and more are likely to come in the near future. However, if the relations between China and Turkey are truly to be upgraded to a higher level, large-scale joint economic projects, such as the nuclear plant project or the various high-speed railway projects both of which are already under consideration are needed now to take off and materialize. It is those kinds of projects that establish long term, lasting mutual interests between countries; and without the existence of such strong interests, political volatility can easily derail relations, as Turkey and China have recently witnessed. Turks are eagerly expecting to see the concrete outcomes of the OBOR project in their country.

Dr. Altay Atlı is an Istanbul-based academic and writer specialising in international political economy and international relations. He is a research associate at the Asian Studies stream of Istanbul Policy Center (IPC) at Sabancı University, and teaches courses on international political economy, international economics and comparative Asian political economy at various universities.